For investors willing to wait the shares look cheap as drilling is on hold for
now, says Questor.

FALKLAND Oil and Gas (FOGL) now represents an extremely cheap way into the oil exploration story off the islands. However, shareholders have been turned into penguin watchers for now as there will be little drilling activity for over a year.

The initial enthusiasm over the hydrocarbon potential around the Falkland Islands has been somewhat tempered after a series of discoveries of only sand and water. Falkland Oil and Gas had disappointments at two major prospects last year called Loligo and Scotia, after neither found commercially viable reserves of the black stuff.

The problem with exploring down in the Falklands is that there is only limited kit. The Leiv Eriksson drilling rig is shared among all the other explorers so, with each drilling project running for months, the waiting list is long.

Falkland Oil and Gas said it did not expect another drilling rig to float by until the final quarter of 2014. The company has now put $125m (£78m) of its cash on term deposit, out of the total of $161m cash on the balance sheet.